Let me simplify this for you. When I first transitioned from underwriting to project management, one of the biggest eye-openers was seeing how many buyers focused solely on "How much will a lender approve me for?" instead of asking "How much should I actually spend?" Those are two very different questions, and the gap between them has gotten wider in 2026.
Right now, we're looking at a housing market where the median new home costs $413,500 according to August 2025 U.S. Census Bureau data while mortgage rates hover around 6.11% for a 30-year fixed loanper Zillow's November 2025 data. Compare that to the median household income of $83,150 as reported by the Federal Reserve Bank of St. Louis, and you can see why affordability calculations matter more than ever.
Think of it like this. Your lender will tell you the maximum you qualify for based on their risk models, but your budget needs to account for your actual life including the emergency vet visit, the HVAC replacement you didn't plan for, and whether you want to occasionally eat out instead of cooking every single meal. In my MSW program, we talk a lot about systems thinking and how financial stress impacts every aspect of family wellbeing. The monthly mortgage payment isn't just a number on paper, it's something you'll wake up thinking about every single month for potentially 30 years.
Here's what customers never tell you until they're stressed out at the closing table: they used three different affordability calculators online and got three wildly different numbers. One said they could afford $350,000, another said $425,000, and a third said $280,000. So which one was right?
The short answer is that all of them might be right depending on what assumptions they're using. Some calculators use the conservative 28/36 rule we'll discuss shortly. Others assume you're comfortable pushing your debt-to-income ratio to 45% or even 50%. Some factor in property taxes and insurance costs based on national averages that might be way off for your specific area, and many don't account for HOA fees which in some communities can run $300-$500 per month.
The AmeriSave Home Affordability Calculator takes a more comprehensive approach. You input your annual pretax income, the location where you're shopping (because property taxes in New Jersey are very different from Texas), how much cash you have available for down payment and closing costs, your monthly debt payments, and an estimate of your credit score. What makes this particularly useful is that it gives you three ranges instead of one magic number.
The first range shows you what's comfortably affordable where your housing costs won't keep you up at night. The second range is where you're stretching a bit, which might be fine if you're expecting income growth or have very stable employment. The third range is the aggressive top end that represents the maximum you might technically qualify for, but you need to think hard about whether that monthly payment leaves enough cushion for life's surprises.
Okay, so here's what happened. Back when lenders were trying to establish some rational guidelines for affordability instead of just approving whatever borrowers asked for, the 28/36 rule emerged as a conservative benchmark that's stood the test of time. It says that no more than 28% of your gross monthly income should go toward housing expenses, and your total debt payments including your mortgage shouldn't exceed 36% of your income.
Let's break down the math with a real example. Say you earn $80,000 per year. That's $6,667 in gross monthly income. Under the 28% rule, your housing payment including principal, interest, property taxes, homeowners insurance, and any mortgage insurance or HOA fees should stay under $1,867. The 36% rule says that when you add in your car payment, student loans, credit card minimums, and any other installment debt, everything together shouldn't exceed $2,400 monthly.
Here's the actual formula lenders use for the housing ratio:
(Principal + Interest + Property Taxes + Homeowners Insurance + Mortgage Insurance + HOA Fees) ÷ Gross Monthly Income × 100
If this calculation gives you a number over 28%, traditional guidelines say you're pushing into less comfortable territory. But here's where it gets interesting. While the 28/36 rule is a great starting point, actual lender qualification standards have evolved. Many conventional loans now only look at your overall debt-to-income ratio, not the housing expense ratio separately. And depending on compensating factors like a high credit score or significant cash reserves, lenders might approve you with DTIs as high as 45% or even 50% on certain programs.
Think of it like this. The 28/36 rule is the recommended serving size on a nutrition label. You can exceed it, and many people do, but it's there for a reason. When the National Association of REALTORS® reported in May 2025 that 83% of metro areas saw home price increases, staying within these ratios became even more critical for long-term financial health.
Let me walk you through some actual scenarios using November 2025 market conditions. I'm basing these on a credit score of 720 or higher, current mortgage rates around 6.11%, and property tax and insurance estimates for a median-cost area.
Taylor earns $60,000 annually and has $1,000 in monthly debt. With $40,000 available for down payment and closing costs, Taylor's gross monthly income is $5,000. Using the 28% rule, the maximum housing payment should be $1,400. With a 6.11% interest rate and accounting for taxes and insurance, this translates to a purchase price around $185,000 with a $30,000 down payment. The monthly payment including everything would be approximately $1,375.
Now if Taylor pushed to the upper limits with a 43% DTI (which is aggressive), the maximum approval might stretch to $235,000, but that $1,750 monthly payment leaves very little breathing room when combined with existing debt.
Parker makes $100,000 per year with $1,500 in monthly debt and has $67,000 saved. Under the 28/36 guideline, Parker can afford a $2,333 monthly housing payment. With current rates and a 20% down payment to avoid mortgage insurance, this supports a purchase price around $330,000. At the high end with 50% DTI approval, Parker might technically qualify for up to $450,000, but that $3,667 monthly payment combined with existing debt consumes 62% of gross income. That's a recipe for financial stress even with a solid six-figure salary.
Kelly and Jesse are a couple with $150,000 combined income, $3,000 in monthly debt, and $100,000 for down payment. They earn $12,500 monthly, so their 28% housing budget is $3,500 per month which with a substantial down payment could support a home around $475,000. Their total debt including the mortgage would be $6,500, which is right at 52% DTI.
Wait, let me clarify that calculation. At $3,500 housing plus $3,000 existing debt, they're actually at 52% total DTI, well above the conservative 36% threshold. This illustrates perfectly why the 28/36 rule exists.
Higher income gives you more options. Period. But it's not just about the number on your W-2. Lenders look at stable, documentable income. If you're self-employed or work on commission, you'll typically need two years of tax returns showing consistent earnings. Bonuses and overtime might count, but expect to prove they're regular and likely to continue.
One thing that surprises people is that gross income (before taxes) is what lenders use for qualification. So if you're earning $100,000 but taking home $65,000 after taxes and benefits, the lender is basing your approval on that $8,333 monthly gross figure, not your actual take-home of $5,417. This is why you need to budget based on net income even though qualification uses gross income.
Your DTI ratio is calculated by dividing all your monthly debt obligations by your gross monthly income. This includes your future mortgage payment, car loans, student loans, personal loans, and minimum credit card payments. It does not include utilities, groceries, gas, or other living expenses that lenders just assume you'll figure out.
According to current lending guidelines from Fannie Mae, conventional loans can go up to 45-50% DTI with strong compensating factors, though 43% is more standard. FHA loans allow up to 56.9% DTI in certain situations with automated underwriting approval.
Your down payment size has a ripple effect through your entire mortgage. First obviously it reduces how much you need to borrow. A $350,000 home with 20% down means a $280,000 loan versus a $332,500 loan with 5% down.
But here's what matters even more. With less than 20% down on a conventional loan, you'll pay private mortgage insurance (PMI) which typically adds $75-$200 monthly depending on your loan amount and credit score. That PMI doesn't build equity or benefit you. It protects the lender in case you default.
Additionally, your down payment percentage affects your interest rate. Lenders view larger down payments as lower risk. The difference between 5% down and 20% down might be a 0.25-0.50% rate difference, which on a $300,000 loan translates to $40-$80 per month or $14,000-$29,000 over the life of the loan.
Some borrowers ask whether they should put down 20% or keep cash reserves for emergencies. That's a legitimate question. While 20% down eliminates PMI and gets you a better rate, having only $5,000 left in savings after closing is risky. Most advisors including myself recommend keeping 3-6 months of expenses in reserve even if it means putting less down initially.
Think of your credit score as your financial GPA. Lenders use it alongside other factors to predict how likely you are to repay the loan as agreed. With a score of 760 or higher, you'll typically get the best available rates. Scores between 700-759 are still solid. Between 650-699 you'll face higher rates and possibly stricter requirements.
Below 620 on a conventional loan, you're looking at substantial rate premiums or outright denial. FHA loans accept scores as low as 580 with 3.5% down, or 500-579 with 10% down, but even FHA prices risk into the interest rate.
Here's a practical example using November 2025 rates. On a $300,000 30-year fixed mortgage, a 760+ credit score might get you a 6.00% rate with a $1,799 monthly payment. A 680 credit score could mean a 6.625% rate with a $1,916 monthly payment. A 620 credit score might result in a 7.50% rate with a $2,097 monthly payment. That 150-point score difference costs you $298 per month or $107,280 over 30 years.
The interest rate environment dramatically affects affordability. In late 2021, rates were around 3%. As of November 2025, the average 30-year fixed rate sits at 6.11% according to Zillow data.
That difference might not sound massive, but let's look at the impact on a $350,000 loan. At 3% interest you'd pay $1,476 monthly with $181,229 total interest. At 6.11% interest you'd pay $2,120 monthly with $413,200 total interest. The monthly payment difference of $644 represents $77,280 less buying power at the higher rate if you're keeping your monthly budget constant.
Most buyers default to a 30-year mortgage because it's what everyone talks about. Spreading payments over 360 months minimizes the monthly obligation. But a 15-year mortgage, which typically carries a rate 0.50-0.75% lower than a 30-year, can save you an enormous amount in total interest if the higher payment fits your budget. On a $300,000 loan at November 2025 rates, a 30-year fixed at 6.11% gives you a $1,820 monthly payment with $355,200 in total interest for a $655,200 total cost. A 15-year fixed at 5.58% gives you a $2,464 monthly payment with $143,520 in total interest for a $443,520 total cost. You save $211,680 in interest by paying an extra $644 monthly.
Reserves refer to the number of months you could continue making your mortgage payment if you lost your income. For most conventional loans on primary residences, reserves aren't mandatory but strengthen your application if your DTI is borderline or your credit score is less than stellar. For jumbo loans, expect requirements of 6-18 months depending on the loan amount. From a practical standpoint, I recommend every homeowner maintain at least 3-6 months of total living expenses (not just mortgage) in savings.
I completely understand the frustration when borrowers realize the monthly mortgage payment is just the beginning. One of my friends bought her first home last year, and she called me three months in asking "Why didn't anyone tell me about all these other expenses?" Well, here they are.
Closing costs typically run 3-6% of your purchase price and include loan origination fees, appraisal, title insurance, title search, recording fees, attorney fees, survey, home inspection, and prepaid items like property taxes and homeowners insurance. On a $350,000 home, expect $10,500 to $21,000 in closing costs depending on your location and loan type.
Property taxes vary wildly by location. In Texas you might pay 1.8% of your home's value annually with no state income tax to offset it. In California, Proposition 13 caps property tax increases but you'll pay state income tax. Effective property tax rates can range from 0.28% in Hawaii to over 2% in some New Jersey counties. On a $350,000 home in Texas at 1.8% that's $6,300 annually or $525 monthly, while in Hawaii at 0.28% it's just $980 annually or $82 monthly.
Lenders require homeowners insurance to protect their collateral, and your requirement is to protect your biggest asset. National average premiums in 2025 run around $1,700 annually, but that's misleading because variation is huge. Florida coastal properties might pay $4,000-$8,000 annually due to hurricane risk. Midwest homes in low-risk areas might pay $1,000-$1,500.
If you're buying a condo or in a planned community, homeowners association fees cover shared amenities and maintenance. These can range from $50 monthly in a basic subdivision to $800+ monthly in luxury condo buildings with concierge, fitness center, pool, and extensive common areas.
The general rule is to budget 1-3% of your home's purchase price annually for maintenance and repairs. A $350,000 home means setting aside $3,500-$10,500 per year. That might seem excessive when everything's new, but wait until year seven when you need HVAC replacement at $5,000-$12,000, water heater replacement at $1,200-$3,000, roof replacement at $8,000-$20,000, kitchen appliances at $3,000-$8,000, or exterior painting at $4,000-$10,000.
Okay, so maybe the numbers you're seeing are disappointing. You plugged your info into an affordability calculator and realized you can't afford the neighborhoods you were hoping for. That must have been so stressful. But here's the good news: you have options to improve your financial position before buying.
Every 20-point credit score increase can lower your interest rate by roughly 0.125-0.25%, which saves $25-$50 monthly on a $300,000 loan. Here's how to get there. Pay every bill on time for six months straight since payment history is 35% of your score. Reduce credit card balances below 30% of limits because someone with a $5,000 limit and $4,000 balance will see score improvement by paying down to $1,500. This affects 30% of your score through credit utilization. Don't close old credit cards since length of credit history matters. Dispute errors on your credit report because about 20% of consumers have errors according to FTC studies. Avoid new credit applications since each hard inquiry can ding your score 5-10 points temporarily.
Every $100 in monthly debt you eliminate increases your DTI by roughly 1% assuming stable income. If you're at 45% DTI and want to get to 40%, you need to eliminate $500 in monthly debt obligations. Target high-interest debt first (credit cards typically), then consider whether paying off a car loan makes sense.
While you're working on debt and credit, save aggressively. Automate transfers to a dedicated savings account by paying yourself first and moving money immediately after each paycheck before you're tempted to spend it. Cut discretionary spending temporarily by pausing streaming services you barely use, packing lunch instead of eating out, and skipping the daily $6 coffee. Small cuts add up to $300-$500 monthly for many people. Bank windfalls like tax refunds, work bonuses, birthday money, and side gig income straight to the down payment fund.
Your starter home doesn't have to be your forever home. If you can't afford the 2,500 square foot new construction in the trendy neighborhood, look at 1,600 square feet in an established neighborhood with good bones. Build equity for 5-7 years, then use that as your down payment for the upgrade. Geographic flexibility helps too. If you're able to commute slightly longer, moving 10-15 miles further from the city center often reduces home prices by 15-30% while your income stays the same.
Let me be completely honest about something that keeps me up at night from a professional ethics standpoint. I've seen too many families become "house poor" where they own a home but can barely afford anything else. They're eating ramen every night, can't go to doctors because copays feel too expensive, and one unexpected $800 car repair causes a financial crisis.
Being house poor means your housing costs consume so much of your income that you struggle to pay for other necessities and have zero financial flexibility. This happens when people buy at the absolute top of their approval amount, underestimate recurring costs like property taxes and insurance and maintenance, don't maintain emergency savings after closing, or experience income disruption or unexpected expenses. The social work literature is clear that housing stress contributes to relationship problems, anxiety, depression, and even physical health issues.
Prevention strategies that actually work start with never house hunting without a firm budget. Decide your comfortable monthly payment before you start looking. Tell your REALTOR® that number and stick to it. If you know you're comfortable at $2,000 monthly but technically approved for $2,800, only look at homes in the $2,000 range. Otherwise you'll fall in love with something you can't responsibly afford.
Buy conservatively and build in cushion by aiming for the 28/36 rule even if lenders will approve you higher. That cushion protects you when property taxes increase, the water heater breaks, or you want to actually enjoy your life beyond just making mortgage payments. Research property tax trajectories in the area by talking to current homeowners and asking the city or county how taxes have trended. Budget realistically for maintenance from day one by setting aside that 1-3% of purchase price annually even if nothing's breaking yet. Keep a robust emergency fund of minimum three months of expenses (six months is better) separate from your maintenance fund.
Choose a sustainable loan structure by sticking with fixed-rate mortgages you understand rather than adjustable-rate products or interest-only loans that could increase your payment dramatically in the future. Don't skip home inspection or insurance research since a thorough inspection reveals problems before you buy and adequate insurance protects against catastrophic loss.
After walking through all these calculations, formulas, and scenarios, you might be feeling overwhelmed. That's completely normal. Understanding home affordability isn't a quick task, and it shouldn't be because this is likely the biggest financial decision of your life.
The most important takeaway is that home affordability involves much more than just getting approved for a loan. True affordability means finding a monthly payment that fits comfortably within your budget while still allowing you to save for emergencies, maintain your quality of life, and work toward other financial goals. The 28/36 rule provides a time-tested framework, but your personal situation determines what's truly comfortable for you.
In today's market with rates around 6.11% and median home prices above $400,000, many buyers are facing tough choices between waiting to save more, looking in different areas, or adjusting their expectations about size and features. There's no shame in starting with a modest home that fits your budget comfortably. Building equity through a starter home often provides the foundation for upgrading to your dream home later.
Take time to improve your credit score, pay down existing debt, and build substantial savings for both down payment and reserves. These steps measurably increase your buying power and reduce monthly costs through lower interest rates and eliminated mortgage insurance. Run the numbers conservatively, be honest about what payment feels comfortable given your income and lifestyle, and don't let pressure from lenders, REALTORS®, or your own impatience push you into a financial situation that creates stress rather than security.
When you've done the work to prepare financially and found a home that fits your true budget, homeownership becomes the wealth-building tool and source of stability it's meant to be rather than a constant source of worry. If you're exploring buying a house with low income, AmeriSave offers guidance on programs and strategies that can help make homeownership accessible even when traditional qualification seems out of reach.
The most common mistake I see is only thinking about whether a lender will approve the loan and not whether the monthly payment fits their lifestyle and financial goals. Lenders use standard formulas to figure out how risky it is for them to lend money. They don't know that you want to start a family next year, that your parents are getting older and might need help with money, or that you have student loans that are due in six months. Just because you can get a $400,000 loan doesn't mean you should buy a $400,000 house. First, figure out what monthly payment you can really afford after taking into account taxes, insurance, maintenance, utilities, and lifestyle costs. Then go back to the price of the item that will allow you to make that payment at the current interest rates. A lot of buyers also greatly underestimate the closing costs and the money they need beyond the down payment. You might have $30,000 saved up, but if you spend $8,000 on closing costs and $25,000 on a down payment, you'll only have $5,000 left over for emergencies when you buy your first home. This is risky. Include a buffer for unexpected costs in your first year, such as furniture, repairs, and all the little things you didn't think of, like window treatments, a lawnmower, and higher utility bills than you paid in your apartment.
This is probably the most annoying question because no one, even economists, can say for sure what will happen to interest rates. Rates for a 30-year fixed mortgage are around 6.11% as of November 2025. Some experts think that rates will slowly drop to between 5.9% and 6.2% by 2026. Others, however, say that inflation surprises or changes in the economy could cause rates to rise again. Based on my 15 years of experience in this field, here's my practical advice: if you're financially ready to buy (you have stable income, enough savings, good credit, and have found a home that fits your budget), don't try to time the market. If you wait for rates to drop, you might see home prices go up 3–6% every year while you sit on the sidelines. This often cancels out any benefit from the lower rates. If rates drop a lot, you can also refinance later. Usually, refinancing is worth it when rates drop at least 0.75–1% below your current rate. On the other hand, if you're having trouble making ends meet and buying at the very top of your approval amount, it might be a good idea to wait a year to improve your finances, no matter what rates do. Instead of worrying about rate changes that you can't predict or change, focus on things you can control, like your credit score, down payment size, and monthly budget.
Yes, and this surprises a lot of couples. When two people apply for a mortgage together, lenders look at their combined income and debt. If both incomes are high and the combined debt is low, this can work in your favor. But if one spouse has a lot of credit card debt, student loans, or a car payment, that makes it harder for the whole family to buy things, even if only one person made the debt. Let's say Partner A makes $75,000 a year and has no debt. Partner B makes $50,000 a year and has to pay $1,200 a month in debt. Your total monthly income is $10,417. Your total debt of $1,200 means that 11.5% of your income is already going to pay it off, even before you get a mortgage. With a 43% DTI limit, you can have $4,479 in total debt. This leaves you with $3,279 for housing costs. If Partner A applied alone, they would have $3,225 available for housing with a 43% DTI and no other debts. Partner B's income gives the couple a little more buying power, but not by a lot because Partner B has a lot of debt. One way some couples deal with this is to have one spouse apply for credit on their own if they have good credit and enough income to qualify on their own. This way, the other spouse's bad credit or debt won't hurt the application. This means that only one person is on the mortgage, which changes the structure of ownership, credit benefits, and responsibility.
Yes, there are many programs that help first-time buyers get over problems with affordability. However, the programs' availability and requirements differ from place to place. FHA loans at the federal level let you put down as little as 3.5% and have credit scores as low as 580. This makes it possible for people who couldn't meet the requirements for a regular loan to buy a home. VA loans for qualified military service members, veterans, and surviving spouses come with no down payment and no mortgage insurance. If you meet the income limits, USDA loans can help you buy a home in a rural or suburban area with no down payment. Many states have programs for first-time home buyers run by their Housing Finance Agencies. These programs offer down payment assistance grants of $5,000 to $15,000, lower interest rates, or loans that don't have to be paid back until you sell or refinance. Cities and counties may have local programs that can help even more, especially in areas that focus on community development. Employer-assisted housing programs are also becoming more popular. These programs give employees money or loans that they don't have to pay back to help them buy homes close to work. HUD's website is the best place to find programs in your area because it has a search tool that lets you look by state and city. Most of the time, the requirements are that you have a certain amount of income (usually 80–120% of the area's median income), take a home buyer education course, and live in the home as your main residence for a certain amount of time.
These ratios look at different parts of your finances, and knowing the difference can help you meet lender requirements and feel comfortable with your own finances. The housing expense ratio, also called the front-end ratio, is the amount of money you spend on housing each month divided by your gross monthly income. Housing costs include the mortgage payment, interest, property taxes, homeowners insurance, HOA fees if you have them, and mortgage insurance if you need it. According to the rules, this should stay below 28%. The debt-to-income ratio (also called the back-end ratio) takes all of your monthly debt payments, including housing costs, and divides them by your gross monthly income. This includes your car loans, student loans, credit card minimum payments, personal loans, and any other installment debt you have. According to traditional rules, this should stay below 36%. To make things clearer, here's an example: You make $8,000 a month before taxes. The mortgage payment you suggested, which includes taxes and insurance, is $2,000. You owe $400 for your car and $200 for your student loans. Your housing expense ratio is 25%, which is great. To find it, divide $2,000 by $8,000. Your debt-to-income ratio is 32.5%, which is also good. This is because $2,600 divided by $8,000 is 32.5%. In the past, lenders looked at both the front-end and back-end DTI ratios to make sure they met certain thresholds. Now, many loan programs only look at the back-end DTI ratio. Fannie Mae and Freddie Mac usually back conventional loans that let DTI go up to 45% or even 50% if you have strong compensating factors, like a high credit score or a lot of savings.
There is no one-size-fits-all answer to this question because it depends on your own financial situation, market conditions, timeline, and personal priorities. But I can give you a way to think about the choice. If your local market has been steadily rising (historically 3–6% per year), you plan to stay in the area for at least 5–7 years, you can easily afford the payment, and you are currently paying rent that is equal to or more than what a mortgage payment would be, then buying a starter home now makes sense. When you pay rent every month, you're giving money to a landlord instead of building equity for yourself. If your market has gone up by 20% in the last three years, the house you want could be worth $520,000 by the time you can afford it. Instead, you could buy a $280,000 starter home now, build equity by paying down the principal and letting the value go up, and then use that money to buy a better home in five years. On the other hand, waiting makes sense if you're not financially stable yet and would have to stretch to buy even a starter home, you might have to move for work in the next few years, the market looks like it might be overvalued or about to correct itself, or you have specific needs that a starter home wouldn't meet, like needing more space for a growing family or needing a home that is easy to get to. Real estate transactions have high costs, such as commissions, closing costs, and moving costs, which usually add up to 8–10% of the home's value.
This is where theory and reality meet, and I see a lot of buyers make big mistakes here. After closing, you should have at least three months' worth of living expenses saved up. This includes your new mortgage payment, utilities, insurance, food, transportation, and debt payments. Six months is a lot better. If you're buying a $350,000 home and your monthly bills will be $5,000, you need to have $15,000 to $30,000 in savings that you can get to after paying for the down payment and closing costs. This is why this is so important. You can be sure that you will have unexpected costs in the first year of owning a home. The home inspection found big problems, but small to medium things will still break. The people who owned the house before you took their refrigerator, so you need to buy one. Three months after you move in, the water heater that was "working fine" stops working. You find out that the HVAC system wasn't taken care of and needs a $400 repair. The bills for property taxes come, and they are 10% more than expected. You have to pay $1,800 for your dog's vet bill. If you only have $3,000 left after closing, one big expense will force you to use credit cards or take out a personal loan. This will start a cycle of debt that goes against the whole point of homeownership as a way to build wealth. Different types of loans have different rules about reserves. After closing, jumbo loans may need 12 to 18 months of reserves. Conventional loans with high balances want to see 6 to 12 months. Standard conforming loans don't usually require reserves, but having them can help your application if your credit score or DTI is close to the limit.
I wish every buyer had this exact conversation before they started looking for a house. When a lender approves a mortgage, it means that they think the risk level is acceptable for them based on standard formulas, past data, and rules set by the government. Your comfortable payment is the amount that fits with your real life, including how you spend money, your lifestyle goals, how much risk you're willing to take, and other financial priorities. There can be a huge difference between these two numbers. Let's look at a real-life example. You make $120,000 a year and have $600 in debt each month. A lender might let you buy a $480,000 home with a $3,200 monthly payment, which is a 44% DTI. But when you add up your taxes, health insurance, and retirement contributions, you only get $7,200 a month. You have $3,400 left for utilities, food, gas, insurance, clothes, entertainment, savings, and everything else after paying your $3,200 housing bill and $600 debt bill. That feels tight and doesn't leave much room for mistakes. A $340,000 home with a $2,400 monthly payment might be a better option. Your DTI is 33%, so you have $4,200 left over each month for everything else. This gives you some extra money for meals at restaurants, vacations, hobbies, medical bills, car repairs, and saving money. Even though you "qualified" for a lot more, your quality of life is much better. Keep in mind that lenders don't see your budget categories like your Netflix subscription, gym membership, weekly grocery bill, or the money you send to help your parents.
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